The Center for Decision Sciences at Columbia Business School

We welcome constructive feedback and suggestions to improve this newsletter. You may unsubscribe from this newsletter (but remain on our mailing list for other information) by clicking here and unchecking “Receive Newsletter.”

Abstract: We used functional MRI (fMRI) to investigate human mental processes in a competitive interactive setting—the “beauty contest” game. This game is well-suited for investigating whether and how a player's mental processing incorporates the thinking process of others in strategic reasoning. We apply a cognitive hierarchy model to classify subject's choices in the experimental game according to the degree of strategic reasoning so that we can identify the neural substrates of different levels of strategizing. According to this model, high-level reasoners expect the others to behave strategically, whereas low-level reasoners choose based on the expectation that others will choose randomly. The data show that high-level reasoning and a measure of strategic IQ (related to winning in the game) correlate with the neural activity in the medial prefrontal cortex, demonstrating its crucial role in successful mentalizing. This supports a cognitive hierarchy model of human brain and behavior.iCal (click to add this event to your calendar)

Many people express objections against child labor, exploitation of the workforce or meat production involving cruelty against animals. At the same time, however, people ignore their own moral standards when acting as market participants, searching for the cheapest electronics, fashion or food. Thus, markets reduce moral concerns. This is the main finding of an experiment conducted by economists from the Universities of Bonn and Bamberg.